Major volatility expected for sterling exchange rates this week (Dayle Littlejohn)

This week arguably is the most important week for sterling exchange rates so far in 2018. UK inflation released Tuesday morning and average wage growth released Wednesday morning has the potential to influence monetary policy moving forward and therefore the interest rate decision which will be released Thursday afternoon.

UK inflation over the last 12 month has outpaced average earnings, which has put a strain on consumer spending. This has been a concern for the Bank of England, however recent forecasts are suggesting that throughout the year inflation numbers should fall slightly and average earnings should rise. Inflation remaining at 3% and a slight rise in wage growth this week should benefit the pound.

In regards to interest rates, the Bank of England gave a hawkish statement last month and many forecasters believe the Bank of England will hike interest rates in May. If we receive similar commentary on Thursday, I expect the pound to strengthen making foreign currency cheaper to buy.

For people that are planning a foreign currency purchase in the upcoming months, I expect resistance levels could be tested this week for many sterling currency pairs. My strategy would be to trade if your currency pair reaches current resistance levels.

For people that have no experience within the currency markets its important to understand that support and resistance levels are tools that every currency traders uses as technical analysis. Therefore if you are buying a property abroad, have a business that has FX exposure or just need to make a one off transfer understanding support and resistance levels is important. For more information feel free to email [email protected].

To finish the week, EU officials are going to meet for the EU summit and Brexit will be a main talking point. In recent weeks the EU have blamed the UK for the progression that has been made since the start of 2018. Investors will watch closely as the EU officials could announce whether the UK have permission to start the trade talks early April.

If the EU confirm that trade talks will or will not begin this could have the potential to increase or decrease the value of sterling by a couple of percent. For anyone that is buying or selling sterling I would recommend outlining your position to me, and together we will form a strategy that works for you. My direct email is [email protected].